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Ray Allegrezza

Reshoring rises amid changes

July 30, 2012

Even though I slept through most of my high school physics class, I remember learning that for every action, there is an equal and opposite reaction.
As we prepare to report on this week's furniture market here in Las Vegas, I find myself thinking about Newton's law and how, at least to me, it underscores and explains the growing trends of reshoring and nearshoring.
In previous columns, I shared the results of studies, including some from the Boston Consulting Group, that not only pointed to a growing interest in reshoring, but predicted that by 2015 - when higher U.S. worker productivity, supply chain and logistical advantages, and other factors are taken fully into account - it may start to be more economical to manufacture many goods in the United States again.
That belief is also echoed in a new study from The Hackett Group Inc., which concluded that reshoring could actually reach a crucial tipping point over the next two to three years.
The group's study also determined that companies are exploring reshoring as an option for nearly 20% of their offshore manufacturing capacity between 2012 and 2014.
As a result, my bet in Vegas is that, with the economy still in the doldrums, we should look for a marked uptick in the number of mergers and acquisitions being assembled behind the scenes in our sector.
Here's why: Despite a weak economy, investors (both domestic and foreign) continue to sit on big stockpiles of cash.
When you add low borrowing costs as well as the relatively low valuation rates for a number of companies, the stage is set for investors to take aim at companies they want ... and then pull the trigger.
I know of at least two large foreign companies and three domestic companies that are currently on the hunt for manufacturing facilities in the States.
I bet if you listen very carefully during the week's market, you will hear as many discussions about where product will be made as you will about how much it will cost and when it will be available.
Here's to a successful market!